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Mills & Reeve

Article

Automatic suspensions — a survey

31 May 2013

In the case of Lowry Brothers Ltd and Wilson v Northern Ireland Water Ltd (2012), claims were brought by two bidders who had unsuccessfully bid for appointment to Northern Ireland Water’s capital delivery framework for water and sewerage works. As the claims were commenced prior to the award of the framework, the ‘automatic suspension’ regime was triggered and the contracting authority was prevented from concluding the contract. A hearing on whether the suspension should be lifted was fixed for a few weeks’ time.

In the meantime, the utility asked the Northern Ireland Court to order the bidder to supply a so-called ‘cross-undertaking in damages’. An undertaking of this kind is essentially a promise from the claimant bidder that, in the event that the bidder does not succeed at the full trial of the issues, it has sufficient funds to compensate the ‘innocent’ contracting authority for any losses it suffers due to the delay caused by the suspension. The utility argued that the delay in entering into the framework would cause it significant losses, with a major impact on the delivery of infrastructure improvements and significant cost implications (including additional procurement costs). Without such an undertaking, it argued, these losses would go uncompensated even if the utility was eventually successful at the full trial of the issues…

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